Anyone acquainted with Warren Buffett’s investment strategies acknowledges Apple (NASDAQ: AAPL) as the primary holding in his Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) portfolio, constituting a significant 41.2% of the conglomerate’s total equity investments.
But what about the runner-up? Presently, Bank of America (NYSE: BAC) claims this position, though its reign might be fleeting. My forecast anticipates a different stock rising to become Buffett’s second-largest holding after Apple by the year 2027.
The contenders currently in the limelight Primarily, I firmly believe Apple will maintain its supremacy within Berkshire’s portfolio for the foreseeable future. Despite a slight reduction in Berkshire’s Apple holdings during the fourth quarter of 2023, Buffett’s esteem for the company and its management remains unwavering.
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I do not foresee Apple’s stock plummeting to the extent of losing its top spot. Admittedly, the stock’s valuation may seem inflated given its modest growth trajectory. Nonetheless, the advent of artificial intelligence (AI) could serve as a pivotal catalyst for Apple in the coming years.
As for the stock poised to overtake Bank of America’s position, only three others currently command more than 5% of Berkshire’s holdings.
It’s conceivable that American Express could surpass Bank of America. Berkshire’s stake in AmEx amounts to nearly $36 billion, compared to $39.1 billion for BofA. Although I doubt Buffett will significantly increase his investment in American Express, its growth trajectory may outpace that of Bank of America, potentially propelling it into the second position in Berkshire’s portfolio.
Both The Coca-Cola Company and Chevron face formidable challenges in surpassing Bank of America. Berkshire’s holdings in Coca-Cola amount to $24.7 billion, and $20.8 billion in Chevron. While it’s unlikely that Buffett will significantly increase his investments in Coca-Cola, there’s a possibility of boosting his stake in Chevron, as observed in Q4. Nevertheless, neither stock is likely to displace Bank of America behind Apple, in my estimation.
The potential for another stock to ascend to the second position However, there’s another contender that could leapfrog past Bank of America, American Express, Coca-Cola, and Chevron to claim the second-largest position in Buffett’s portfolio. I believe the circumstances are ripe for Occidental Petroleum (NYSE: OXY) to surpass these contenders.
Buffett holds a deep affinity for Oxy, expressing in a letter to Berkshire shareholders his expectation of owning shares in the oil and gas producer “indefinitely.” He also commended Occidental CEO Vicki Hollub, lauding her proficiency in “separating oil from rock,” a rare skill that adds value to shareholders and the nation as a whole.
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